New research has revealed that children as young as seven years old are receiving an average of £570 a year, roughly £11 a week, in ‘earnings’, and almost half currently have a side business to earn extra cash. While more children under 16 remain wide-eyed and optimistic about growing up to be entrepreneurs, businesses across Britain fold every day, primarily because of issues managing cash flow, a reality shielded from many children.
The UK saw an increase of 2 million small businesses since the year 2000, which accounts for why almost one in three kids want to own a business of their own when they grow up. One of the most popular business choice for these children is to be a professional blogger or vlogger.
Though the research shows that entrepreneurial spirit amongst children is high, when it comes to budgeting and accounting, there’s still a gap in knowledge. Almost half of parents admit their children understand the idea of saving money but rarely do it, and a quarter of parents admit their child spends their money as soon as they get it.
Poor cash flow management is the main reason why two in three small businesses fold in the first five years of trading in the UK, which is why cloud accounting software firm Xero has launched a campaign to make sure kidpreneurs know the basics of money management and accounting early on.
The Making Cash Flow Child’s Play initiative is supported by consumer champion, BBC Dragon and mum of four, Sarah Willingham. “The small business economy is flourishing, and it’s more important than ever that the 5.4 million SMBs in the UK are set up to succeed,” she says. “It’s so encouraging to see from Xero’s research that an increasing number of young children are showing entrepreneurial spirit, whether that be completing chores to earn some extra cash or selling sweets at school for a, sometimes substantial, income.”
The research of over 2,000 six to 12 year olds and their parents reveals that the average child will earn £570 a year through pocket money, good grades and monetary gifts from relatives. Three in four parents say their child must earn their pocket money through chores; the highest paying of these being getting good grades, followed by washing the car, tidying up their room, helping to clean the house and helping with the gardening.
While pocket money can bring in around £200 per year, three quarters of parents say their kids have an interest in making extra money outside of the home. Almost half say their child has a side ‘business’ that earns them an extra £113 a year. The most popular money earners for young people are selling old toys on eBay (38 per cent), selling chocolate and sweets at school (25 per cent) and cleaning neighbours’ cars (21 per cent).
The top 10 ways kids make extra cash
- Selling old toys/belongings on eBay (38 per cent)
- Selling things at school (25 per cent)
- Cleaning neighbours’ cars (21 per cent)
- Doing a paper round (19 per cent)
- Mowing/watering neighbours’ gardens (16 per cent)
- Babysitting (13 per cent)
- Saturday job (12 per cent)
- Cleaning for neighbours/relatives (11.2 per cent)
- Walking dogs (11.1 per cent)
- Charging for technical support (3 per cent)
While kids are clearly savvy when it comes to earning money, it seems they aren’t so shrewd when it comes to saving their earnings. Half of the parents surveyed admit their children understand the idea of saving, but rarely do it. The research also suggests that boys are better at saving money than girls, with 28 per cent of boys admitting they always save their pocket money, compared to 23 per cent of girls. This could suggest a greater urgency in boosting basic money management skills among children to stem a potential gender gap in knowledge.
“I’m excited to learn from the research that almost one third of kids would like to own their own business when they grow up, eyeing up all sorts of careers from being a blogger to an app developer,” added Willingham. “As a mother of four, I think it’s essential that we teach children about the importance of good budgeting and the basic principles of sound money management from an early age to set them up for the future.”